Use the Table for the Questions Below

question 50

Multiple Choice

Use the table for the questions below
Consider the following information on options from the CBOE for Rackspace.
-Assume you want to sell 20 put option contracts with an exercise price closest to being at-the-money and that expires January 2011.The current price that you would receive for such a contract is:

• A)$1750
• B)$2000
• C)$3500
• D)$3900
• E)$4400

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Definitions:

Marginal Cost

Marginal Cost is the cost incurred to produce one additional unit of a product or service, crucial for decision-making on production levels and pricing strategies.

Variable Cost

A cost that changes in proportion to the level of output or activity.

Fixed Cost

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance.

Marginal Cost

Marginal Cost is the increase or decrease in the total cost of production resulting from producing one additional unit of a product.